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What next for procurement?

Deloitte's global CPO survey reveals that rising risk levels and a skills shortage are major concerns for the future

27 Jul 2016

Deloitte's latest global CPO survey makes for salutary reading. Three hundred and twenty four of the most senior procurement leaders from 33 countries, who have a combined annual turnover of $4.4 trillion, have serious concerns about the state of their domain. Rising risk levels and a skills shortage are their main concern but on the flip side an increase in digital technology spend might suggest that CPOs are looking at innovative solutions to address these global problems.

James Gregson, EMEA head of sourcing and procurement at Deloitte said: "Digital technology spend is on the rise, with 70 per cent investing in self-service solutions up by more than a third a year. Investment in mobile, cloud and social media is also increasing. These statistics suggest a shift to digital, but careful work needs to be done first as 60 per cent of CPOs admit they do not have a clear strategy."

While CPOs work on their digital strategies, more fundamental problems need to be addressed. Forty-five per cent of CPOs reported a rise in procurement-related risk such as a volatility in emerging markets and geopolitical uncertainty affecting their supply chain. Fifty-five per cent reported an increase in external financial and economic uncertainty. But of all the industries surveyed, consumer business respondents were the most concerned, given procurement’s role in ensuring product availability in locations now affected by uncertainty, instability and security risk.

Coupled with the rising risk factor is a widening skills gap. The new research showed that 62 per cent of CPOs said their team does not have the skills and capabilities to deliver their procurement strategy, while just under half reported that their training budgets are now less than one per cent of total operating budgets, one quarter of what might be considered best practice.

Deloitte’s Gregson added: "On the talent side we are seeing training budgets cut and a push towards outsourcing as a way to plug the skills gap. This trend is most prevalent in the largest organisations [with an annual turnover in excess of $50 billion], where 40 per cent are expected to pursue outsourcing for some element of their function."